MAPICS Clings To Its Customers' Loyalty
On April 30, MAPICS, Inc. (NASDAQ: MAPX), one of the leading providers
of software applications for mid-sized manufacturers, reported results
for the second quarter of its fiscal 2001. For the three months ending
March 31, 2001, MAPICS reported earnings of $1.5 million, before goodwill
amortization, on revenue of $34.0 million, which compares to the year-earlier
period, when earnings totaled $640,000, excluding special charges and
goodwill amortization, on revenue of $34.5 million. The Company reported
breakeven earnings for Q2 2001 including goodwill amortization, compared
with a net loss of $12.3 million, for Q2 2000. While the software license
revenues of $10.9 million declined 27% compared to a year ago license
revenues of $15 million, the company generated a total of $8.5 million
in cash from operations that enabled it to reduce debt by $2.8 million
and increase its cash position to $17.2 million.
ability to sustain cash earnings reflects the value of our extensive worldwide
customer base," remarked Dick Cook, president and CEO. "In spite of the
general slowdown in the economy, manufacturers are continuing to seek
ways to enhance their backbone information systems as well as to equip
their enterprises for more collaboration with customers and suppliers.
This underlying demand is playing directly to the strengths of MAPICS."
added, "We have the flexibility to support not only customers seeking
to partner with MAPICS to upgrade to an entirely new system, but also
those just wanting to add individual components to enhance their competitiveness
and take their business online. Our products offer proven software solutions
to manufacturers regardless of the computer equipment platform they may
be using, and our active product development effort is providing positive
momentum to our marketing programs. We found solid interest in new e-business
applications introduced last week at our annual international User Conference.
Cameleon, which is already being shipped, is our latest Internet-based
tool that guides customers through a series of selections to configure
a product for their particular needs and enables the automation of numerous
sales-related activities. Commerce, an Internet storefront solution,
integrates with MAPICS' planning and scheduling offering to enable customers
to reserve plant capacity to guarantee on-time delivery of their orders.
These and other MAPICS offerings are part of our overall solution that
manufacturers can use to succeed in today's collaborative environment."
the CEO rhetoric sounds like very little new accounts activity and a great
effort to cross-sell to existing customer base, the company's resilience
during current tempestuous times for smaller applications vendors is praiseworthy.
Even as 2000 was quite challenging and put the company through a number
of dilemmas and tough decision-making (e.g., acquisition of a competitor
and subsequent restructuring), 2001 brings the challenge of evading the
sword of Damocles, which is hanging over a vast majority of mid-market
the last 15 months, MAPICS delivered a plethora of new e-business products
and expanded its platform reach from its solely IBM iSeries (formerly
AS/400) and DB/2 platforms to include Microsoft Windows NT, UNIX and Oracle
DB platforms. MAPICS' solutions now comprise two ERP systems (XA and Point.Man),
plus supply chain management (Thru-Put), collaborative commerce (TeamWeRX),
and enterprise asset management (Maincor EAM) products. MAPICS has concurrently
taken steps to reduce costs through a restructuring plan to re-direct
additional resources to more attractive extended-ERP enterprise applications
for manufacturers. Results in 2001 apparently reflect these actions. An
enhanced product offering and sound financial position should position
the company better than most of its struggling mid-market peers.
has also maintained an active focus on additional partnering arrangements
intended to help manufacturers move into a collaborative e-business land
in a more controlled manner. To that end, we endorse MAPICS' recent partnership
initiatives, like those with Vanguard Solutions Group for business intelligence
add-on modules for its mature XA product, and Access Commerce, which also
has a similar agreement with QAD for its attractive Cameleon product configurator
(for more information, see MAPICS
XA Expands BI Offering Through Partnership With Vanguard and Access
Commerce Spices Up North American CRM Fray).
the fact that the license revenue in 2000 was less than those in 1999
and 1998, when MAPICS only had the single, outdated product, indicates
the company faces difficulties. The management of dual flagship product
lines remains awkward for MAPICS and its affiliate channel. While we believe
winning the new accounts will continue to be a tall order, the existing
loyal client base is the company's greatest strength and asset, and the
company will need to figure out how to be more effective in selling new
modules to the existing base.
of over 3,500 customers, there may be about 2,500 accounts that are only
on a service & maintenance basis, and we fail to see active programs directed
to selling to the base. Consequently, the company needs to more efficiently
mine its client base by doing a better job of selling the broadened offering,
by getting its affiliate channel both excited about the product portfolio
and by upgrading the channel's ability to sell. However, that will suffice
only in a short-to-mid term. Therefore, strategically, MAPICS will have
to solve the 'new deals' conundrum in a world where smaller vendors with
older products have a problem to overcome the market's perception, in
addition to scarce resources and an onslaught of bigger brethren.
will have to resolve the predicament of its association with the old,
green-screen, AS/400 product. Despite IBM's efforts to counter AS/400
platform's image of being proprietary (even by renaming it into iSeries),
the market has been slow in warming up to it for e-business implementations.
Given the fact that the market opportunity for Point.Man is therefore
much larger than for XA, due to Point.Man's strong Web-enablement, personalization,
interoperability and scalability capabilities, we should imagine Point.Man
to tacitly become the main offering for MAPICS in the long run. The Catch
22 lays in the fact that XA is still functionally a stronger product than
Point.Man across the range.
product/platform cultures clash and the fear of Pivotpoint's brand being
suffocated under MAPICS has, in fact, prompted some exodus of former Pivotpoint's
executives and/or staff. Nevertheless, MAPICS seems to have controlled
the damage as seen in the delivery of global functionality in its newest
product release, Point.Man 6.0. The product includes financial capabilities,
multi-currency functionality, and comes in several languages, which should
make it more competitive. Unfortunately for MAPICS, the product delivery
coincides with the global weakness of the market.
Potential and current MAPICS users can be assured about its viability
and position within the manufacturing mid-market. MAPICS remains a stable
company, with a strong customer service record and developed affiliate
channel in over 70 countries. The company has broadened its product lines
and has seemingly weathered the major acquisition. However, one is to
watch how well it will maintain ongoing strength within the affiliate
channel, how well it will target the right e-business issues for the manufacturing
mid-market and, subsequently, how it can increase the growth of new licenses.
MAPICS XA customers should review the above-mentioned enhancements (both
developed by MAPICS and through alliances) with their local affiliate
to determine the additional value that can be generated from their MAPICS
database. MAPICS customers with custom systems or products from other
vendors should review the affiliate's development capabilities in order
to gain data integration between their various systems. New customers
evaluating MAPICS XA should consider the necessary enhancement modules
an essential part of MAPICS XA and insist on reviewing them as part of
comprehensive recommendations for both current and potential MAPICS users
can be found in How
Has MAPICS Been Extending?